There’s bad news from Seattle for advocates of a $15-an-hour minimum wage law. Turns out the measure’s costs to the city’s low-wage workers have outweighed benefits by 3 to 1, according to a new city-commissioned study by University of Washington researchers. The average low-wage worker has lost $125 a month because of the higher-wage decree, the study found - even before it is fully phased in.
David Autor, a leading labor economist at MIT, told The Post the study seemed “very credible” and suggested that it might have enough “statistical power” to “change minds” in the perennial argument over the minimum wage.
Autor was wrong - not about the study’s credibility, but about its potential for moving people off their “priors.” The Seattle study met a furious counterattack from proponents of a $15 minimum. Defenders of the law came armed with a much rosier assessment of its impact by economists at a pro-labor University of California at Berkeley think tank, produced a few days before the more skeptical one came out.
It seems that Seattle’s mayor, a big advocate of the $15 minimum, had gotten a heads-up on the impending negative study and asked the Berkeley group to weigh in. Seattle Weekly called it “an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight.”
We need a more intellectually honest minimum wage debate, one that acknowledges both the intuitive moral appeal of preventing exploitation of the least-skilled, lowest-paid workers - and the countervailing risk of a wage so high that it harms the very people it’s supposed to help.
Years of contention have established two points: Very high minimum wages would be counterproductive economically, and a $0 minimum is impossible politically. Between those realities, economists, activists and politicians haggle endlessly. Meanwhile, better-targeted policies for rewarding work by low-income people - such as the earned-income tax credit wage supplement - get short shrift.
And so perhaps we should change the subject, from how high we set the wage to how we set it, period. The goal: a relatively objective process, as opposed to just picking a number that sounds good to Bernie Sanders or, for that matter, the restaurant lobby.
Undemocratic, you say? The author of the federal minimum wage, President Franklin D. Roosevelt, believed that this was an issue best left to technocrats. His first proposal for a minimum wage called on the Labor Department to fine-tune it, industry by industry.
Congress rejected that idea, sparing the country a bureaucratic nightmare while creating a political one: a federal minimum wage that can be changed only if lawmakers act.
FDR’s methods were clumsy, but his instinct was sound: If government is going to make a rule for the labor market, the least it can do is base it on facts about the labor market.
Congress should benchmark the minimum-wage level to historical data, then connect it to an independent adjustment factor, so that when it rises, it does so consistently and in response to shifts in the economy - not the political winds.
Consider: Since 1938, the federal minimum wage has not exceeded 54 percent of average private-sector hourly wages, a level it hit in 1968, nor fallen below 28 percent, which is where the $7.25 federal minimum ranks today.
The midpoint between those extremes is 41 percent, a number that felicitously resembles ratios between minimum and average wages in other advanced industrial countries.
Multiplying 41 percent by the current average hourly wage, $26.22, yields a new federal minimum of $10.75. Phase it in over a few years, index it to wage growth or an equivalent factor - and move on to less contentious topics like health care, or how many angels can dance on the head of a pin.
It would require Republicans to make a huge ideological concession. But the payoff for them would be significant: the immediate, and permanent, defusing of an issue that naturally favors Democrats.
Businesses might complain. But a 41-percent-of-average-wage minimum wage would not be that big a hit to them, given that more than half of all workers already live in states or cities, such as Seattle, that have raised the minimum wage above the federal level, in response to political campaigns that sprouted in the absence of congressional action.
Indeed, to account for local labor markets, Congress might grant states waivers to set their own minimum wages higher or lower than the federal one, provided that they do so by applying the federal methodology to state wage levels. Heaven knows our states and cities could do with one less thing to argue about, too.